Honda Thailand Plans to Run Ayutthaya Plant at Full Capacity

Honda Motor Co. (7267)’s Thai unit plans to operate its plant in Ayutthaya province at its full capacity of 240,000 vehicles a year to meet market demand after the factory was flooded in 2011.

“Honda is here to stay,” Hiroshi Kobayashi, president and chief executive officer of Asian Honda Motor Co., told a press conference today at the Rojana Industrial Park assembly plant in Ayutthaya. “Thailand remains very important for Honda’s businesses,” including research and development and as a production base, he said.

Honda, Japan’s third-largest carmaker, resumed output at the plant on March 26 after halting production in October. The country’s worst floods in almost 70 years disrupted the supply chains of companies from Apple Inc. to Toyota Motor Corp. (7203)

Honda President Takanobu Ito forecast record vehicle sales in the fiscal year starting in April as the company recovers from natural disasters both at home and in Thailand.

The Thai unit, Honda Automobile (Thailand) Co., plans to produce about 1,000 cars a day by operating two 8-hour shifts at two facilities, it said in a statement.

Southeast Asian Expansion

Honda is expanding in Southeast Asia. It plans to spend 3.1 trillion rupiah ($340 million) to build a plant making small passenger cars in Indonesia, the company said on March 15. The factory will begin operations in 2014, with annual production of 120,000 units.

The company plans to double total sales in Southeast Asia, India and Oceania to one million units in five years, Kobayashi said.

Sales of light vehicles in 10 major car markets in Asia may surge 10 percent this year to 33.5 million units, thanks to a recovery in Japan and growth in China and India, May Arthapan, director at LMC Automotive Thailand, said by phone from Bangkok.

Honda’s earnings next fiscal year will climb to the highest in at least five years and sales may rise above 4 million vehicles for the first time, led by sales of Accord sedans and Civic compacts in North America, Ito said in late January.

Flood Effect

After the Thai floods, the company lowered its full-year profit forecast to a three-year low of 215 billion yen ($2.6 billion) in the 12 months ending March 31, compared with a previous estimate of 230 billion yen, it said in a statement on Jan. 31.

Large Japanese automakers have increased overseas production since 2009 to respond to a 9 percent strengthening in the yen against the dollar during the period, according to Bloomberg Industries. Nissan Motor Co. and Honda have been the most aggressive, boosting output abroad to 75 percent of total assemblies. The ratio for Toyota, Asia’s largest carmaker, is 60 percent as it has pledged to keep building 3 million units in Japan.

To contact the reporter on this story: Supunnabul Suwannakij in Bangkok at ssuwannakij@bloomberg.net

To contact the editor responsible for this story: Paul Tighe at ptighe@bloomberg.net

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